Robust ABS Preliminary Retail Trade Figures for July continue to be driven by government stimulus

ABS Preliminary Retail Trade Figures for July reveal a robust overall performance, with household goods leading the overall sales uptick with a 30% year on year increase as more Australians stay at home, the Australian Retailers Association (ARA) said today.

The data released today shows a 3.3% lift in retail turnover from June to July 2020, with turnover increasing 12.2% in July 2020 compared with the same period last year.

ARA CEO Paul Zahra said the positivity of early July was curbed by Victorian restrictions later in the month, which led to it being the only state to record a fall, with a decrease of 2%.

“We anticipate remaining in a two-speed retail economy for much of the year, with Victorian retailers the main outlier in an otherwise strong result,” said Mr Zahra.

“Anecdotally, online sales remain elevated, which suggests online shopping habits developed over the initial lockdown are becoming permanent. The ARA strongly advocated for online trading to remain in place within Victoria and it’s heartening to know that many retailers have strengthened their online presence and sales. This provides an important hedge against store closures and lockdowns.”

Mr Zahra highlighted the continued impact of stimulus and support measures on the strength of retail spending, noting that the tapering off of these benefits from September may dampen retail spending.

“Whilst there is a lot to feel positive about in the July results, discretionary retailers and those in CBD, tourist locations and of course within Victoria, continue to face vastly different outcomes to those in essential and household categories.

“We are encouraged by these numbers, but also mindful that retail spending will be impacted by the tapering off of current benefits such as JobKeeper and JobSeeker, along with a related rise in unemployment in the coming months,” he said.

Mr Zahra said JobKeeper 2.0 and Victoria’s rent relief scheme will provide a lifeline for retailers in the hardest hit locations and categories.

“We applaud Victoria’s leadership in extending the tenancy support schemes until the end of the year. The pandemic is far from over and we are keen to see other states and territories follow suit. Discretionary retailers around the country are still suffering from weak economic conditions, and retailers in CBD and tourist locations face a grim future – we won’t see their recovery for some time and they will need support,” Mr Zahra said.

“The October to December quarter will make or break many retailers, with stores relying on a strong Christmas trading period to support their recovery,” Mr Zahra concluded.

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